Welcome to Latam Highlights, your weekly summary of important crypto and financial events from throughout Latin America. El Salvador strikes a $1.4 billion agreement with the IMF this week, which influences its approach to Bitcoin adoption; Argentina starts internet patrols for cryptocurrencies; and the Senate of Brazil is ready to review bitcoin laws.
IMF Deal Forces El Salvador to Limit Integration of Bitcoin
Reaching an agreement with the International Monetary Fund (IMF), President Nayib Bukele has made a major step towards strengthening El Salvador’s economy. The agreement gives the nation a $1.4 billion credit facility meant to assist economic reforms and help balance of payments issues.
With doors open to further financing from foreign institutions, this financial package might amass $3.5 billion in support over the next forty months. Emphasising that this facility is meant to sustain development, the IMF commended El Salvador’s post-pandemic recovery and financial reforms.
The agreement does, however, come with terms that might change El Salvador’s Bitcoin approach. The nation has to lower the importance of Bitcoin in its economy if it is to guarantee the money, a direction advised by the IMF.
There are two main policy revisions scheduled:
Bitcoin no longer qualifies as required legal tender. Legal changes will make use of optional nature.
Public institutions will cut their engagement with Bitcoin, including state purchases, crypto tax payments, and the usage of the official crypto platform, the Chivo wallet.
These circumstances suggest a stop to Bukele’s well reported Bitcoin purchases, a trademark of his government. To preserve consumer interests and financial stability, the IMF also underlined the need of more openness, control, and transparency of digital assets.
Fascinatingly, these restrictions run counter to what Bukele’s crypto consultants recently said—that Bitcoin purchases might be funded from the nation’s gold reserves.
